The Rising Influence of Rising Affluence

[DewDiligence]

TOT re Russia: Other than COP, which has a 20% equity
stake in Lukoil, TOT would seem to be the super-major
with the largest involvement in Russia. From the standpoint
of political risk, as long as Putin is running things I would
think Russia would be on a par with most Third World
countries (although less risky than Venezuela and Nigeria).

http://finance.yahoo.com/news/Total-Novatek-to-develop-apf-3925761256.html

›Total, Novatek to Develop Siberian Gas Field

By Karina Ioffee
Wednesday June 24, 2009, 12:25 pm EDT

MOSCOW (AP) -- France's Total SA and Russian gas firm Novatek have agreed to jointly develop a major gas field in western Siberia -- a major foreign investment in the risky Russian energy sector.

Russia's Prime Minister Vladimir Putin unveiled the deal Wednesday after a meeting with the companies' chief executives.

Total and Novatek will invest some $900 million to explore and develop the Termokarstovoye gas condensate field on the Yamal peninsula in western Siberia, Putin said.

Total will buy 49 percent in Novatek's subsidiary which owns the field for an undisclosed amount, Novatek said in a statement. The final investment decision will be taken in 2011, Novatek said.

The French oil company is also interested in forming a joint venture with state-run gas monopoly Gazprom to build a liquified natural gas plant on Yamal, but a decision has not been finalized, Total's chief executive Christophe de Margerie said.

Putin urged Russia's government to increase Russia's LNG capacities.

"We are thinking about diversifying our industry, and we are expandining into LNG," Putin said. "This will allow us to expand into other markets."

Unlike regular natural gas, liquefied natural gas is easy to store and transport. Once cooled, the gas becomes liquid and can be shipped in tankers rather than via pipelines.

Total also pledged to continue investing in the Gazprom-controlled, $25 billion Shtokman project to develop a huge gas field in the Barents Sea.

De Margerie said Total sees great "potential for long-term investment in Russia." "We like that the companies we work with have the support of the government," he said.

Novatek is part-owned by Gazprom and Russian businessman Gennady Timchenko, the co-founder of oil trading firm Gunvor.

Termokarskoye field is believed to hold 47.3 billion of gas and gas condensate.

The deal was announced more than a year after a bitter boardroom dispute inside the British-Russian venture TNK-BP made foreign investors anxious about the prospects for investments in Russian energy.

Industry analysts sounded skeptical of the deal's profitability for Total.

Viktor Mishnyakov, an oil and gas analyst at UralSib investment bank, said that the field is small and difficult to develop.

VTB Capital's Lev Snykov said that the deal is very good for Novatek whose infrastructure is based in Yamal, but Total will also get its benefits. "This is an opportunity for them to enter the market and boost its position here in the future," he said.‹